Topic: Agency in General
One of the names appearing upon said
Case Title: Director of Public Works v Sing Juco et
al.
Date: 1929 July 12
Ponente: STREET, J.
Legal Doctrine: In article 1827 of the Civil Code it
is declared that guaranty shall not be presumed; it
must be expressed and cannot be extended beyond its
specified limits. By analogy a power of attorney to
execute a contract of guaranty should not be inferred
from vague or general words, especially when such
words have their origin and explanation in particular
powers of a wholly different nature.
Facts:
Sing Juco, Sing Bengco, Gonzales Tanboontien, and
Mariano de la Rama (Sing Juco et al.) are co-owners
of a parcel of land located at the mouth of Iloilo river.
Said land is so low that it is frequently flooded. In
1920 the co-owners conveyed the property by way of
mortgage to the Philippine National Bank to secure a
credit of Php170,000.
In 1921, the government was planning extensive
harbor improvements in the vicinity which required
dredging to be carried out by the Bureau of Public
Work (the Bureau). The dredging activity made it
necessary to secure an area where the dirt and mud
from the areas dredged could be deposited. The
aforementioned land was a prime candidate, being
accessible and low. The Bureau contracted with the
co-owners Sing Juco et al. for this purpose, where the
co-owners would pay the Bureau 20 to 75 centavos
per cubic meter of material deposited on the property.
It was contemplated in the contract that the Bureau
would furnish only the material dredged from the
river as a result of the government improvements,
which was expected to be 250,000 cubic meters.
In connection with the contract mentioned, the
Bureau required that the co-owners provide a bond in
the amount of Php150,000, approximately twice the
estimated cost of the filling, conditioned for the
payment of the amount due from the owners. This
bond was executed contemporaneously with the main
contract.
contract was that of Casa Viuda de Tan Toco,
purporting to be signed by M. de la Rama x x x as
the formers attorney-in-fact.
The Bureau, having completed the dredging,
demanded payment for the dredged material. The co-
owners failed to pay, prompting the Director of the
Burea to file an action to recover the amount due
from the parties of the suretyship and to enforce the
obligation as a lien upon the property. The PNB was
impleaded as having an interest in the property under
its prior mortgage. Tan Ong Sze, the widow (viuda)
of Tan Toco was also impleaded by reason of her
supposed liability derived from the act of De la Rama
in signing the firm Casa Viuda de Tan Toco as a
surety on bond. In its complaint, the government
conceded to the primacy of PNBs encumbrance.
In their defense, the co-owners averred that the land
had not been benefited, since the Bureau had not
appreciably raised the level of the land above high
water. Tan Ong Sze avers that she should be released
from the bond since de la Rama signed Casa Viuda
de Tan Toco on the surety without authority. PNB
asserts that the mortgage was superior to
governments lien.
The trial court ordered: (1) the co-owners to pay the
government Php70,938; (2) that the governments
lien was superior to PNBs mortgage; and (3) that
Tan Ong Sze was personally liable in case the co-
owners fail to satisfy their debt to the government.
The defendants appeal as follows: (1) The co-owners
and sureties argue to be released from their respective
obligations on the basis of the Bureaus breach of
contract; (2) Tan Ong Sze reasserts the same
argument of want of authority of de la Rama to bind
her in the suretyship; and (3) PNB reasserts that its
mortgage had be constituted first is therefore superior
to the governments lien.
Issue(s): (1) Is the Bureau in breach of its contract
with the co-owners? (2) Is Tan Ong Sze bound as a
surety by virtue of de la Ramas act of signing as her
attorney-in-fact? (3) Is PNBs mortgage superior to
the governments lien?
Held: (1) No; (2) No; (3) Yes
Ratio: property, and the lien created by the contract could
only operate upon the equity of redemption.
(1) The government is not in breach. The Bureau is
not obligated to raise the co-owners land to any
specified level. The obligation is merely to furnish
only the material dredged from the river as a result of
the proposed improvements. The mention of 250,000
cubic meters of material in the contract, although not
binding on the government as it was merely an
estimate of the amount of material to be deposited,
was duly satisfied. In fact, the Bureau deposited more
than the mentioned 250,000 cubic meters.

(2) Tan Ong Sze is not bound as surety. The power-

of-attorney conferred to de la Rama relate more
specifically to the execution of contracts relating to
property x x x. Power to execute a contract so
exceptional a nature as a contract of suretyship or
guaranty cannot be inferred from the general words
contained in these powers.

In article 1827 of the Civil Code it is declared that

guaranty shall not be presumed; it must be expressed
and cannot be extended beyond its specified limits.
By analogy a power of attorney to execute a contract
of guaranty should not be inferred from vague or
general words, especially when such words have their
origin and explanation in particular powers of a
wholly different nature. It results that the trial court
was in error in giving personal judgment against Tan
Ong Sze upon the bond upon which she was sued in
this case.

(3) PNBs mortgage is superior to the governments

lien. The mortgage was created by the lawful
owners at a time when no other competing interest
existed in the property. The lien of the mortgage
therefore attached to the fee, or unlimited interest of
the owners in the property. On the other hand, the lien
created by the filling contract was created after the
mortgage had been made and registered, and
therefore, after the owners of the property had parted
with the interest created by the mortgage. The
Government's lien owes its origin to the contract, and
derives its efficacy from the volition of the
contracting parties. But no party can by contract
create a right in another intrinsically greater than that
which he himself possess. The owners, at the time
this contract was made, were owners of the equity of
redemption only and not of the entire interest in the